NFRS (Nepal Financial Reporting Standard) VS IFRS
NFRS (Nepal Financial Reporting Standard) was issued by Nepal Accounting Standard Board in 2013.NFRS are issued in line with IFRS to maintain accounts of Nepal that are understandable and comparable with the Global business language.
NFRS For SME
Since there is no carve-out as on date on NFRS for SME so we can understand the language and practical aspect from IFRS for SME.
Earlier ICAN has pronounced the NFRS for SMEs will be effective from 2076 Shrawan 1 (17 July 2019) but…
As per the decision of institute of chartered of Nepal dated 2077/3/11, NFRS for SME will be applicable only from 2078/04/01 but an entity can apply even before that date in its own choice. Similarly, NAS for MEs and NPOs will apply from the same date.
Applicability of NFRS for SME
NFRS for SME will apply for small and medium-size i.e
- Which do not have public accountability and
- Public general purpose financial statement for external purpose.
- Must not be a micro Entity.
Public Accountability
- Borrowings from banks or financial institutions or public funds or from entities holding assets in a fiduciary capacity -NRs 500 million or more
- Balance Sheet total (without off-setting current liabilities with current assets- NRs 1,000 million or more
- Annual Turnover- NRs 1,000 million or more
- Holding assets in a fiduciary capacity in excess of NRs 500 million
An entity that attains at least 1 of these limits in 2 consecutive years shall be qualified as Entity having public accountability and once qualified must fall below all of these limits for 2 consecutive years to cease to qualify.
Micro Entities
- Annual Turnover of NRs 100 million or less
- Borrowings from banks or financial institutions or public funds or from entities holding assets in fiduciary capacity of NRs 50 million or less
- Balance Sheet Total of NRs 100 million (without off-setting current liabilities in current assets) or less
- Holding assets in a fiduciary capacity of NRs 50 million or less (includes security brokers handling Demat account, microfinance and cooperatives
An entity must meet all of these limits in 2 consecutive years to qualify as a micro-entity and once qualified, must exceed at least 1 of these limits for 2 consecutive years to cease to qualify.
Carve-outs in NFRS
There is not much difference in NFRS And IFRS except some carve in NFRS issued by ASB Nepal on Bhadra 28 2075, which is provided only for financial year 2017-18,2018-19,2019-20 so some are already exhausted and some are about to exhaust in the year 2019-2020.
The following 7 carve-outs have been issued principally for Banks and financial institutions however, other entities may also use these carve-outs with necessary disclosures.
List of Standard on which Carveout are issued
- NFRS 10: Consolidated Financial Statements
Preparation of consolidated financial statement using uniform accounting policies - NAF 17: Lease
Operating lease in the financial statements of Lessees - NAS 28: Investments in Associates and Joint Ventures
Accounting for Investment in Associates as per equity method using uniform accounting policies - NAS 34: Interim Financial Reporting
Accounting for Investment in Associates as per equity method using uniform accounting policies - NAS 39: Financial Instruments: Recognition and Measurement
Incurred Loss Model to measure the Impairment Loss on Loan and Advances - NAS 39: Financial Instruments: Recognition and Measurement
Impracticability to determine transaction cost of all previous years which is the part of effective interest rate - NAS 39: Financial Instruments: Recognition and Measurement
Impracticability to determine interest income on amortized cost
For Carve out detail download carve-out provided by ASB Nepal or visit the site of Accounting standard board, Nepal.
In addition to above ,on recommendation By NRB ,ASB Nepal issued 4 carve out as attached on Mangshir 4 ,2076
